Should the government buy plus?

I refer to the statement made by Dato Shahrir Samad where he suggested the government takes over PLUS to reduce the financial burdeon of the people and the government in addressing the concession agreement with PLUS.

With due and utmost respect to Dato Shahrir Samad, whom I regards as one of the few honest politicians who speak with his mind, I believe Dato Shahrir has actually miss a major point. The government actually owns PLUS as we speak today.

If we were to study the PLUS 2006 annual report, we will be able to make the following deductions:

Issued capital – 1.25 billion

Large Shareholders with shareholding of 5% and above

UEM 40.21%

Khazanah 23.87%

EPF 9.65%

From the Khazanah website, it is quite obvious that UEM is also own by the government via Khazanah. So when the Minister says that we should make it a government property, I believe Dato Shahrir means that it means buying those shares that are not own by the government as it is.

My own analysis of the scenario is that buying PLUS is actually not a very good idea. If you see the shareholding structure of PLUS, you can see that the directors themselves own very little shares in the company. What does this mean? It means that they know this is not a company that can make money. PLUS is merely a financial conduit for the other companies that is associated with UEM where the common director has larger stakes.

By studying the 2006 annual report, we can see that more than RM 5.8 billion was actually paid out to UEM and its subsidiary companies. What does this mean? Well let me make this simple. If someone is sitting in a company and start signing various service agreement with other companies where the directors has a bigger shareholding, it means that something fishy is going on. No wonder they keep a bare minimum number of shares in the company.

If my memory serves me right, UE took a RM 4 billion loan from the government to built the highway and over the last few years I think we can safely say that we have been paying many billions over the original cost. However due to the not so recent financial crisis and some politically led corporate maneuver’s, plus became a government company partly. Well there may be some quarters that claims that t has to be done due to other national interest, I beg to differ.

So, where do we stand today on the toll and PLUS issue. The government will still raised the toll to satisfy the shareholders of Teras Technology, Propel, Rangkaian Segar, UEM, Time Quantum Technology, BizAid Technology. If one were to analyze in detail the amount of payment made to the IT linked arm, you will be shocked on the ” service charges”. If plus is my own company, there is no reason for me to pay RM 2,135 billion recurrently( every year) on IT related service fee to subsidiary like Teras Technology, Time Quantum Technology and Biz Aid. I am a medical doctor and I have an MBA in IT, I can say for sure spending 100 million is already plentiful enough to setup and IT system. All you need is several million more to maintain it yearly. Well maybe I am a cheapskate businessman that count pennies and that is why I can come out with such a figure.

So, Dato Shahril you see, there are people out there that are very good with their maths. They make everything looks good on paper and went to make corporate maneuvers, the Malaysian Public interest is not the prime importance. As the chairman of PAC, I urged you to look at this affair. The public keep asking to see the various concession agreement but many failed to appreciate many facts that is available in the Public Domain. The question that we should be asking is not about buying PLUS (which is partly owned by the government) but about buying UEM. Then only you can control the cost of managing the highway and keeping it low for the malaysian consumer. It appears that we are paying ridiculous amount of money in so called maintenance activity.

With rising oil price, we need to find ways to keep the country to be economically competitive to produce goods cheaper than the rest of the world. With all this corporate game that makes cost of living higher among malaysian, we are definitely losing our edge. For Malaysian, be prepared to pay more next year on TOLL to enrich UEM and its subsidiaries (indirectly its majority shareholders)

Regards and best wishes,

Dr Mohamed Rafick Khan bin Abdul Rahman

MD, MMed(OM), MBA(IT), Dip Ae Med, CTM, AME (17)